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Brief Commentary On Eagle Materials Inc.’s (NYSE:EXP) Fundamentals

Donald Bartholomew

Eagle Materials Inc. (NYSE:EXP) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of EXP, it is a financially-robust company with a a strong track record of performance, trading at a great value. Below is a brief commentary on these key aspects. If you’re interested in understanding beyond my high-level commentary, read the full report on Eagle Materials here.

Good value with proven track record

EXP’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that EXP manages its cash and cost levels well, which is an important determinant of the company’s health. EXP appears to have made good use of debt, producing operating cash levels of 0.57x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

NYSE:EXP Income Statement Export December 24th 18

EXP’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of EXP’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the basic materials industry, EXP is also trading below its peers, relative to earnings generated. This supports the theory that EXP is potentially underpriced.

NYSE:EXP Intrinsic Value Export December 24th 18

Next Steps:

For Eagle Materials, I’ve put together three pertinent aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for EXP’s future growth? Take a look at our free research report of analyst consensus for EXP’s outlook.
  2. Dividend Income vs Capital Gains: Does EXP return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from EXP as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of EXP? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.